Contract with general contractor on house flip

[Scott MacComb]

I am doing my first true house flip (have remodeled plenty of houses for rental) and am trying to figure out a contract to use with a new general contractor whom I have not worked with previously.  After hearing about, and personally encountering some horror stories of disagreements between homeowners and contractors, I am wanting to establish a clear contract to use with a new general contractor.  My only goal is to have all the details clearly spelled out so we can adjust price and deadlines in a fair manner as things come up.  Does anyone have a good contract or outline of terms they like using with contractors?  The one I am speaking with currently has not offered up any sort of contract so I am taking the lead on preparing something. 

[Tim Delaney]

I don’t have a template for you as my partner handles that end of our deals, but I will share some insight that you will also hear on many podcasts. I like to hire the contractor for labor only - we buy the materials that they need. This reduces their upfront cost so they don’t need a large deposit. Plus I get the buy materials on my CC to get the points. We also set up milestones for larger projects so they know they will get paid certain amounts when certain tasks are done, but always withholding a large chunk for the very end. We also try to incentivize early completion with bonuses and punish late completion with reduced payments, but in reality this often becomes challenging because of things outside the contractor’s control.

Hope this helps you some.